Toyota group trying to survive in Indonesia’s hot minivan market
By Merliyani Pertiwi
JAKARTA, NNA – Japan’s largest carmaker Toyota Motor Corp. and its group firm Daihatsu Motor Co. are resisting raising prices in Indonesia’s increasingly competitive affordable minivan market, offering 2019 models at the same prices as last year’s.
PT Toyota-Astra Motor (TAM) launched the new Avanza and Veloz last week, while PT Astra Daihatsu Motor (ADM) introduced its Grand New Xenia.
TAM Vice President Henry Tanoto said the company set the prices for the new models after studying production costs, exchange rates and expected sales volumes as well as acceptable retail price ranges.
"We have decided that the prices should be the same as in 2018. Hopefully Indonesian people will find them acceptable,” he told NNA.
ADM, Daihatsu’s local unit, has decided against price increases in a gesture of appreciation to loyal customers.
“New Xenias can be owned at the unchanged prices. It’s a manifestation of our commitment to our customers," Amelia Tjandra, ADM Marketing Director at Daihatsu BSD Astra Biz Center, South Tangerang on Java island, told NNA.
Toyota and Daihatsu began producing low multi-purpose vehicles (LMPVs), an affordable range of MPVs, or minivans, in Indonesia in 2003.
Avanzas and Xenias are popular, but they are facing increasingly fierce competition from Suzuki’s Ertiga, Nissan’s Livina, Honda’s Mobilio and Mitsubishi’s Xpander and Wuling.
Yoshihiro Nakata, TAM president, said even though Toyota’s LMPVs still lead the Indonesian market, the company is concerned about competition.
“LMPV market competition is getting tighter,” he said.
TAM remains optimistic that Avanza sales will maintain a large market share in Indonesia as they account for more than 70 percent of Toyota's total wholesale figure.
“Our sales have been increasing steadily every year. In the January-November period, total Avanza sales at the wholesale level were 75,493 units, with a market share of 28 percent,” TAM’s Tanoto said.
“With [the introduction of] the more stylish and modern model, we have set the market share target for this year at 30 percent.”
This year Toyota predicts Indonesia’s LMPV market will grow around 5 percent.
In the 15 years the company has been in Indonesia, the Avanza has recorded total sales of more than 1.7 million units. Toyota has set the sales target for new Avanzas and Velozs in a range of 7,000 to 7,500 units per month, Tanoto said.
In the 15-year period, Daihatsu Xenias sold more than 643,000 units. The sales target for Grand New Xenias is 3,000 units per month in 2019, up from that for the previous model at 2,500 units in 2018, according to Tjandra.
“Currently there are a total of seven brands competing in the LMPV segment,” ADM’s Tjandra said. “We must build a stronger strategy so that this year's sales, especially those for Xenias, will increase by 20 percent compared to last year.”
In total, Daihatsu's sales target for 2019 is the same as in 2018, at around 200,000 units, reflecting expectations that the affordable minivan market will lose some of its steam.
The Association of Indonesian Automotive Manufacturers (Gaikindo) forecast that domestic vehicle sales will increase by 5 percent to 1.05 million units this year.
It is based on macro-economic indicators in the 2019 Indonesian state budget, particularly the government’s economic growth target of 5.5 percent.
But the combined sales target by carmakers for LMPVs is estimated to be around 1.1 million units.
“Therefore, it is possible that the automotive industry will not easily increase the prices for new models,” Jongkie D. Sugiarto, chairman of the association, told NNA.
Based on Gaikindo data, LMPVs have a 30 percent share of total vehicle sales.
Jongkie predicts this affordable minivan segment will remain the most popular among Indonesian motorists.
With per capita income of $3,600 per year, multipurpose vehicles with a selling price of around 200 million rupiah ($14,000) are a realistic proposition for many Indonesians.
If the down payment for a car loan is about 20 million rupiah, the average monthly debt repayment is around 3.5 million rupiah, or 42 million rupiah ($3,000) annually. Typically, Indonesian consumers go for a four-year car loan.
More expensive models of MPVs cost in a range of 250 million rupiah to 500 million rupiah.
The caption for Photo 2:
The launch of Toyota’s new Avanza model in Jakarta on Jan. 15
The caption for Photo 4:
Daihatsu's Grand New Xenia debuts in South Tangerang, Indonesia on Jan. 15